CATHAY PACIFIC AIRWAYS vs.

CA
G.R. No. 60501. March 5, 1993

FACTS:
On 19 October 1975 Respondent Tomas Alcantara was a first class passenger of petitioner Cathay
Pacific Airways from Manila to Hongkong and onward from Hongkong to Jakarta. The purpose
of his trip was to attend the following day, a conference with the Director General of Trade of Indonesia,
Alcantara being the Executive Vice-President and General Manager of Iligan Cement
Corporation, Chairman of the Export Committee of the Philippine Cement Corporation, and
representative of the Cement Industry Authority and the Philippine Cement Corporation.
He checked in his luggage which contained not only his clothing and articles for personal use
but also papers and documents he needed for the conference.

Upon his arrival in Jakarta, respondent discovered that his luggage was missing. Private
respondent was told that his luggage was left behind in Hongkong.

For this, respondent Alcantara was offered $20.00 as “inconvenience money" to buy his immediate
personal needs until the luggage could be delivered to him. His luggage finally reached Jakarta
more than twenty four (24) hours after his arrival. However, it was not delivered to him at his
hotel but was required by petitioner to be picked up by an official of the Philippine Embassy. The
respondent, as a result of the incident had to seek postponement of his pre-arranged
conference.

He then filed a complaint against Cathay with RTC of Lanao del Norte praying for moral,
temperate and exemplary damages. RTC ruled in favor of Alcantara. P20,000.00 for moral
damages, P5,000.00 for temperate damages, P10,000.00 for exemplary damages, and
P25,000.00 for attorney's fees. Both appealed to CA. CATHAY assailed the conclusion of the
trial court that it was accountable for breach of contract and questioned the non-application by
the court of the Warsaw Convention as well as the excessive damages awarded on the basis of
its finding that respondent Alcantara was rudely treated by petitioner's employees during the
time that his luggage could not be found. For his part, respondent Alcantara assigned as error
the failure of the trial court to grant the full amount of damages sought in his complaint.

CA affirmed ruling of RTC with modification to award of damages. Moral damages to

P80,000.00, exemplary damages to P20,000.00 and temperate or moderate damages to
P10,000.00. The award of P25,000.00 for attorney's fees was maintained.

ISSUE/S:

1. WoN there was breach of contract

2. WoN Cathay Pacific is liable for damages
3. WoN the Warsaw Convention is applicable to this case

HELD:

1. YES. Petitioner breached its contract of carriage with private respondent when it failed to
deliver his luggage at the designated place and time, it being the obligation of a common
 carrier to carry its passengers and their luggage safely to their destination, which
includes the duty not to delay their transportation, and the evidence shows that petitioner
acted fraudulently or in bad faith.

2. YES. Moral damages predicated upon a breach of contract of carriage may only be
recoverable in instances where the mishap results in death of a passenger, or where the
carrier is guilty of fraud or bad faith. CATHAY alleges that as a result of mechanical
trouble, all pieces of luggage on board the first aircraft bound for Jakarta were unloaded
and transferred to the second aircraft which departed an hour and a half later. Yet,
petitioner was not even aware that it left behind private respondent's luggage until its
attention was called by the Hongkong Customs authorities.

While the mere failure of CATHAY to deliver respondent's luggage at the agreed place
and time did not ipso facto amount to willful misconduct since the luggage was
eventually delivered to Alcantara, SC is persuaded that the employees of CATHAY acted
in bad faith. SC refer to the deposition of Romulo Palma, Commercial Attache of the
Philippine Embassy at Jakarta, who was with respondent Alcantara when the latter
sought assistance from the employees of CATHAY. The CATHAY representative was not
only indifferent and impatient; he was also rude and insulting. He simply advised
Alcantara to buy anything he wanted. But even that was not sincere because the
representative knew that the passenger was limited only to $20.00 which, certainly, was
not enough to purchase comfortable clothings appropriate for an executive conference.
Considering that Alcantara was not only a revenue passenger but even paid for a first
class airline accommodation and accompanied at the time by the Commercial Attache of
the Philippine Embassy who was assisting him in his problem.
a. CATHAY's employees should have been more solicitous to a passenger in
distress and assuaged his anxieties and apprehensions. To compound matters,
CATHAY refused to have the luggage of Alcantara delivered to him at his hotel;
instead, he was required to pick it up himself and an official of the Philippine
Embassy. Under the circumstances, it is evident that petitioner was remiss in its
duty to provide proper and adequate assistance to a paying passenger, more so
one with first class accommodation.

3. Although the Warsaw Convention has the force and effect of law in this country, said
convention does not operate as an exclusive enumeration of the instances for declaring
a carrier liable for breach of contract of carriage or as an absolute limit of the extent of
that liability. It must not be construed to preclude the operation of the Civil Code and
other pertinent laws. It does not regulate, much less exempt, the carrier from liability for
damages for violating the rights of its passengers under the contract of carriage,
especially if wilful misconduct on the part of the carrier's employees is found or
established.